Second quarter revenues of $4.5 billion decreased 10 percent from the
same quarter in 2015. Lower truck production in North America and weak
global demand for off-highway and power generation equipment were the
most significant drivers of the decline in sales. Currency negatively
impacted revenues by approximately 1 percent compared to last year,
primarily due to a stronger US dollar.

Revenues in North America decreased 13 percent while international sales
declined by 4 percent. Within international markets, revenues in the
Middle East, Mexico and Brazil declined the most.

Earnings before interest and taxes (EBIT) in the second quarter were
$591 million, or 13.1 percent of sales, down from $721 million or 14.4
percent of sales a year ago.

Net income attributable to Cummins was $406 million ($2.40 per diluted
share), compared to $471 million ($2.62 per diluted share) in the second
quarter of 2015. The tax rate in the second quarter of 2016 was 25.7
percent.

“We made strong progress in our cost reduction initiatives in the second
quarter, while continuing to invest in and launch new products that will
drive profitable growth in the future,” said Tom Linebarger, Cummins
Chairman and CEO. “Benefits from restructuring actions, material cost
reduction initiatives, and improvements in product quality helped to
mitigate the impact of weak demand in a number of our largest markets
and will position the Company for stronger performance when markets
improve. We have returned more than $1 billion to shareholders so far
this year, through a combination of dividends and share repurchases. Our
Board of Directors recently approved an increase in our quarterly
dividend of 5.1 percent, consistent with our plans to return 75 percent
of operating cash flow to shareholders in 2016,” concluded Linebarger.

Based on the current forecast, Cummins expects full year 2016 revenues
to be down 8 to 10 percent, lower than our previous guidance of down 5
to 9 percent primarily due to a lower outlook for North America truck
production and weaker demand in global off-highway markets. EBIT is
expected to be in the range of 11.6 to 12.2 percent of sales, unchanged
from three months ago.

Other recent highlights:

Cummins won the 2016 Award of Excellence in Energy Management from the
Clean Energy Ministerial (CEM), a high-level global forum that
promotes policies and programs to advance clean energy

The Board of Directors approved an increase in the Company's quarterly
cash dividend from 97.5 cents per share to $1.025 per share

Cummins was recently named as one of the Top 50 Companies for
Diversity by DiversityInc for the tenth consecutive year

The Company repurchased 1.8 million shares in the second quarter

Second quarter 2016 detail (all comparisons to same period in 2015)

Engine Segment

Sales - $2.0 billion, down 14 percent

Segment EBIT - $206 million, or 10.3 percent of sales, compared to
$278 million or 12.0 percent of sales

Segment EBIT reflects a $39 million charge to increase our estimate
for the loss contingency recorded in the fourth quarter of 2015

On-highway revenues declined 15 percent primarily due to weaker truck
production in North America

Distribution Segment

Sales - $1.5 billion, up 3 percent

Segment EBIT - $87 million, or 5.6 percent of sales, compared to $113
million or 7.6 percent of sales

Increased revenue from acquisitions was partially offset by a decline
in organic sales in North America and the Middle East and the negative
impact from a stronger US dollar

Components Segment

Sales - $1.3 billion, down 8 percent

Segment EBIT - $190 million, or 14.9 percent of sales, compared to
$223 million or 16.0 percent of sales

Revenues declined in North America due to lower industry truck
production, partially offset by growth in China

Revenues declined in most major markets due to weak demand for power
generation equipment and industrial engines

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary
business units that design, manufacture, distribute and service diesel
and natural gas engines and related technologies, including fuel
systems, controls, air handling, filtration, emission solutions and
electrical power generation systems. Headquartered in Columbus, Indiana,
(USA) Cummins currently employs approximately 55,000 people worldwide
and serves customers in approximately 190 countries and territories
through a network of approximately 600 company-owned and independent
distributor locations and approximately 7,200 dealer locations. Cummins
earned $1.4 billion on sales of $19.1 billion in 2015. Press releases
can be found on the Web at www.cummins.com.
Follow Cummins on Twitter at www.twittter.com/cummins
and on YouTube at www.youtube.com/cummininc.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements regarding our
forecasts, guidance, preliminary results, expectations, hopes, beliefs
and intentions on strategies regarding the future. These forward looking
statements include, without limitation, statements relating to our plans
and expectations for our revenues for the full year of 2016. Our actual
future results could differ materially from those projected in such
forward-looking statements because of a number of factors, including,
but not limited to: the adoption and implementation of global emission
standards; the price and availability of energy; the pace of
infrastructure development; increasing global competition among our
customers; general economic, business and financing conditions;
governmental action; changes in our customers’ business strategies;
competitor pricing activity; expense volatility; labor relations; and
other risks detailed from time to time in our Securities and Exchange
Commission filings, including particularly in the Risk Factors section
of our 2015 Annual Report on Form 10-K. Shareholders, potential
investors and other readers are urged to consider these factors
carefully in evaluating the forward-looking statements and are cautioned
not to place undue reliance on such forward-looking statements. The
forward-looking statements made herein are made only as of the date of
this press release and we undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise. More detailed information about factors that
may affect our performance may be found in our filings with the
Securities and Exchange Commission, which are available at http://www.sec.gov
or at http://www.cummins.com
in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information

EBIT is a non-GAAP measure used in this release, and is defined and
reconciled to what management believes to be the most comparable
generally accepted accounting principles (GAAP) measure in a schedule
attached to this release. Cummins presents this information as it
believes it is useful to understanding the Company's operating
performance, and because EBIT is a measure used internally to assess the
performance of the operating units.

Webcast information

Cummins management will host a teleconference to discuss these
results today at 10 a.m. EST. This teleconference will be webcast and
available on the Investor Relations section of the Cummins website at www.cummins.com. Participants wishing to view the visuals available with the audio
are encouraged to sign-in a few minutes prior to the start of the
teleconference.

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (a)

Three months ended

July 3,

June 28,

In millions, except per share amounts

2016

2015

NET SALES

$

4,528

$

5,015

Cost of sales

3,331

3,683

GROSS MARGIN

1,197

1,332

OPERATING EXPENSES AND INCOME

Selling, general and administrative expenses

524

537

Research, development and engineering expenses

155

166

Equity, royalty and interest income from investees

88

94

Other operating expense, net

(39

)

—

OPERATING INCOME

567

723

Interest income

6

6

Interest expense

16

17

Other income (expense), net

18

(8

)

INCOME BEFORE INCOME TAXES

575

704

Income tax expense

148

208

CONSOLIDATED NET INCOME

427

496

Less: Net income attributable to noncontrolling interests

21

25

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

$

406

$

471

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

Basic

$

2.41

$

2.63

Diluted

$

2.40

$

2.62

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic

168.8

179.2

Diluted

169.0

179.6

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.975

$

0.78

(a) Prepared on an unaudited basis in accordance with
accounting principles generally accepted in the United States of
America.

Six months ended

July 3,

June 28,

In millions, except per share amounts

2016

2015

NET SALES

$

8,819

$

9,724

Cost of sales

6,566

7,197

GROSS MARGIN

2,253

2,527

OPERATING EXPENSES AND INCOME

Selling, general and administrative expenses

1,014

1,054

Research, development and engineering expenses

321

361

Equity, royalty and interest income from investees

160

162

Other operating expense, net

(41

)

(3

)

OPERATING INCOME

1,037

1,271

Interest income

12

11

Interest expense

35

31

Other income, net

26

1

INCOME BEFORE INCOME TAXES

1,040

1,252

Income tax expense

280

352

CONSOLIDATED NET INCOME

760

900

Less: Net income attributable to noncontrolling interests

33

42

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

$

727

$

858

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

Basic

$

4.27

$

4.77

Diluted

$

4.26

$

4.76

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic

170.3

179.9

Diluted

170.5

180.3

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

1.95

$

1.56

(a) Prepared on an unaudited basis in accordance with
accounting principles generally accepted in the United States of
America.

Common stock held by employee benefits trust, at cost, 0.7 and 0.9
shares

(9

)

(11

)

Accumulated other comprehensive loss

(1,620

)

(1,348

)

Total Cummins Inc. shareholders’ equity

6,861

7,406

Noncontrolling interests

334

344

Total equity

$

7,195

$

7,750

Total liabilities and equity

$

15,020

$

15,134

(a) Prepared on an unaudited basis in accordance with
accounting principles generally accepted in the United States of
America.

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (a)

Six months ended

July 3,

June 28,

In millions

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income

$

760

$

900

Adjustments to reconcile consolidated net income to net cash
provided by operating activities

Restructuring payments

(42

)

—

Loss contingency

39

—

Depreciation and amortization

259

254

Deferred income taxes

2

(63

)

Equity in income of investees, net of dividends

(87

)

(68

)

Pension contributions in excess of expense

(82

)

(122

)

Other post-retirement benefits payments in excess of expense

(17

)

(15

)

Stock-based compensation expense

20

17

Translation and hedging activities

(45

)

27

Changes in current assets and liabilities, net of acquisitions

Accounts and notes receivable

(252

)

(426

)

Inventories

(101

)

(127

)

Other current assets

189

18

Accounts payable

139

97

Accrued expenses

(209

)

(21

)

Changes in other liabilities and deferred revenue

129

133

Other, net

32

(35

)

Net cash provided by operating activities

734

569

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(189

)

(247

)

Investments in internal use software

(27

)

(22

)

Investments in and advances to equity investees

(17

)

(17

)

Acquisitions of businesses, net of cash acquired

(1

)

(15

)

Investments in marketable securities—acquisitions

(379

)

(173

)

Investments in marketable securities—liquidations

237

155

Cash flows from derivatives not designated as hedges

(21

)

5

Other, net

6

14

Net cash used in investing activities

(391

)

(300

)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings

109

12

Net borrowings of commercial paper

200

—

Payments on borrowings and capital lease obligations

(133

)

(31

)

Distributions to noncontrolling interests

(24

)

(14

)

Dividend payments on common stock

(333

)

(280

)

Repurchases of common stock

(695

)

(514

)

Other, net

(16

)

(2

)

Net cash used in financing activities

(892

)

(829

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(117

)

19

Net decrease in cash and cash equivalents

(666

)

(541

)

Cash and cash equivalents at beginning of year

1,711

2,301

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

1,045

$

1,760

(a) Prepared on an unaudited basis in accordance with
accounting principles generally accepted in the United States of
America.

CUMMINS INC. AND SUBSIDIARIESSEGMENT INFORMATION(Unaudited)

As previously announced, beginning with the second quarter of 2016, we
realigned certain of our reportable segments to be consistent with
changes to our organizational structure and how the Chief Operating
Decision Maker monitors the performance of our segments. We reorganized
our business to combine our Power Generation segment and our high
horsepower engine business to create the new Power Systems segment. Our
reportable operating segments consist of: Engine, Distribution,
Components and Power Systems. We began to report results for our new
reporting structure in the second quarter of 2016 and also reflected
this change for historical periods.

We allocate certain common costs and expenses, primarily corporate
functions, among segments. These include certain costs and expenses of
shared services, such as information technology, human resources, legal,
finance and supply chain management. In addition to the reorganization
noted above, we reevaluated the allocation of these costs, considering
the new segment structure created in April 2016 and adjusted our
allocation methodology accordingly. The revised methodology, which is
based on a combination of relative segment sales and relative service
usage levels, is effective for the periods beginning after January 1,
2016 and resulted in the revision of our segment operating results,
including segment earnings before interest, income taxes and
noncontrolling interests (EBIT), for all four segments for the first
quarter of 2016 with a greater share of costs allocated to the
Distribution and Components segments than in previous years. Prior
periods were not revised for the new allocation methodology. These
changes had no impact on our consolidated results.

Power

Non-segment

In millions

Engine

Distribution

Components

Systems

Items (1)

Total

Three months ended July 3, 2016

External sales

$

1,504

$

1,538

$

933

$

553

$

—

$

4,528

Intersegment sales

498

6

346

368

(1,218

)

—

Total sales

2,002

1,544

1,279

921

(1,218

)

4,528

Depreciation and amortization(2)

41

29

32

29

—

131

Research, development and engineering expenses

53

3

51

48

—

155

Equity, royalty and interest income from investees

46

19

12

11

—

88

Interest income

3

1

1

1

—

6

Segment EBIT

206

87

190

90

18

591

Segment EBIT as a percentage of total sales

10.3

%

5.6

%

14.9

%

9.8

%

13.1

%

Three months ended June 28, 2015

External sales

$

1,834

$

1,487

$

1,017

$

677

$

—

$

5,015

Intersegment sales

491

8

380

420

(1,299

)

—

Total sales

2,325

1,495

1,397

1,097

(1,299

)

5,015

Depreciation and amortization(2)

47

25

28

26

—

126

Research, development and engineering expenses

53

3

57

53

—

166

Equity, royalty and interest income from investees

51

21

8

14

—

94

Interest income

2

1

1

2

—

6

Segment EBIT

278

113

223

127

(20

)

721

Segment EBIT as a percentage of total sales

12.0

%

7.6

%

16.0

%

11.6

%

14.4

%

(1)

Includes intersegment sales, intersegment profit in inventory
eliminations and unallocated corporate expenses. There were no
significant unallocated corporate expenses for the three months
ended July 3, 2016 and June 28, 2015.

(2)

Depreciation and amortization as shown on a segment basis excludes
the amortization of debt discount and deferred costs included in
the Condensed Consolidated Statements of Income as
"Interest expense."

Power

Non-segment

In millions

Engine

Distribution

Components

Systems

Items (1)

Total

Six months ended July 3, 2016

External sales

$

2,993

$

2,996

$

1,830

$

1,000

$

—

$

8,819

Intersegment sales

985

11

686

729

(2,411

)

—

Total sales

3,978

3,007

2,516

1,729

(2,411

)

8,819

Depreciation and amortization(2)

80

57

63

58

—

258

Research, development and engineering expenses

110

7

107

97

—

321

Equity, royalty and interest income from investees

82

37

20

21

—

160

Interest income

5

2

2

3

—

12

Segment EBIT

403

174

353

136

9

1,075

Segment EBIT as a percentage of total sales

10.1

%

5.8

%

14.0

%

7.9

%

12.2

%

Six months ended June 28, 2015

External sales

$

3,523

$

2,956

$

1,948

$

1,297

$

—

$

9,724

Intersegment sales

947

15

748

802

(2,512

)

—

Total sales

4,470

2,971

2,696

2,099

(2,512

)

9,724

Depreciation and amortization(2)

93

52

54

54

—

253

Research, development and engineering expenses

122

6

118

115

—

361

Equity, royalty and interest income from investees

74

41

17

30

—

162

Interest income

4

2

2

3

—

11

Segment EBIT

478

201

418

228

(42

)

1,283

Segment EBIT as a percentage of total sales

10.7

%

6.8

%

15.5

%

10.9

%

13.2

%

(1)

Includes intersegment sales, intersegment profit in inventory
eliminations and unallocated corporate expenses. There were no
significant unallocated corporate expenses for the six months ended
July 3, 2016 and June 28, 2015.

(2)

Depreciation and amortization as shown on a segment basis excludes
the amortization of debt discount and deferred costs included in
the Condensed Consolidated Statements of Income as
"Interest expense." The amortization of debt discount and deferred
costs was $1 million for both of the six months ended July 3, 2016
and June 28, 2015.

A reconciliation of our segment information to the corresponding amounts
in the Condensed Consolidated Statements of Income is shown in
the table below:

Three months ended

Six months ended

July 3,

June 28,

July 3,

June 28,

In millions

2016

2015

2016

2015

Total segment EBIT

$

591

$

721

$

1,075

$

1,283

Less: Interest expense

16

17

35

31

Income before income taxes

$

575

$

704

$

1,040

$

1,252

Income before income taxes as a percentage of net sales

12.7

%

14.0

%

11.8

%

12.9

%

CUMMINS INC. AND SUBSIDIARIESEQUITY INVESTEES DATA(Unaudited)

EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

Equity, royalty and interest income from investees included in our Condensed
Consolidated Statements of Income for the reporting periods was as
follows:

Net income and diluted earnings per share (EPS) attributable to
Cummins Inc. excluding special items

We believe these are useful measures of our operating performance for
the periods presented as they illustrate our operating performance
without regard to special items including tax adjustments. These
measures are not in accordance with, or an alternative for, accounting
principles generally accepted in the United States of America (GAAP) and
may not be consistent with measures used by other companies. It should
be considered supplemental data. The following table reconciles net
income attributable to Cummins Inc. to net income attributable to
Cummins Inc. excluding special items for the following periods:

Six months ended

July 3, 2016

June 28, 2015

In millions

Net Income

Diluted EPS

Net Income

Diluted EPS

Net income attributable to Cummins Inc.

$

727

$

4.26

$

858

$

4.76

Less

Tax benefit

—

—

18

0.10

Net income attributable to Cummins Inc. excluding special items

$

727

$

4.26

$

840

$

4.66

Earnings before interest, income taxes and noncontrolling interests

We define EBIT as earnings before interest expense, income tax expense
and noncontrolling interests in income of consolidated subsidiaries
(EBIT). We use EBIT to assess and measure the performance of our
operating segments and also as a component in measuring our variable
compensation programs. This measure is not in accordance with, or an
alternative for, GAAP and may not be consistent with measures used by
other companies. It should be considered supplemental data. Below is a
reconciliation of EBIT to “Net income attributable to Cummins Inc.” for
each of the applicable periods:

Medium-duty truck and bus - We manufacture diesel engines
ranging from 200 to 450 horsepower serving medium-duty truck and bus
customers worldwide, with key markets including North America, Latin
America, Europe and Mexico. We also provide diesel and natural gas
engines for school buses, transit buses and shuttle buses worldwide,
with key markets including North America, Europe, Latin America and
Asia, and diesel engines for Class A motor homes (RVs), primarily in
North America.

Light-duty automotive (Pickup and Light Commercial Vehicle (LCV)) -
We manufacture 105 to 385 horsepower diesel engines, including engines
for the pickup truck market for Chrysler and Nissan in North America,
and LCV markets in Europe, Latin America and Asia.

Off-highway - We provide diesel engines that range from 60 to
755 horsepower to key global markets including construction, mining,
rail, defense, agriculture, marine, and oil and gas equipment and also
to the power generation business for standby, mobile and distributed
power generation solutions throughout the world.

Revised unit shipments by engine classification (including unit
shipments to Power Systems and off-highway engine units included in
their respective classification) were as follows:

2016

Units

Q1

Q2

Q3

Q4

YTD

Heavy-duty

19,700

20,700

—

—

40,400

Mid-range

55,400

62,300

—

—

117,700

Light-duty

61,700

57,100

—

—

118,800

Total units

136,800

140,100

—

—

276,900

2015

Units

Q1

Q2

Q3

Q4

YTD

Heavy-duty

28,700

32,800

28,600

24,300

114,400

Mid-range

61,200

66,600

59,600

59,700

247,100

Light-duty

51,200

53,400

47,800

56,900

209,300

Total units

141,100

152,800

136,000

140,900

570,800

2014

Units

YTD

Heavy-duty

122,100

Mid-range

266,800

Light-duty

204,400

Total units

593,300

Distribution Segment Sales by Product Line

2016

In millions

Q1

Q2

Q3

Q4

YTD

Parts

$

648

$

642

$

—

$

—

$

1,290

Service

299

297

—

—

596

Power generation

275

326

—

—

601

Engines

241

279

—

—

520

Total sales

$

1,463

$

1,544

$

—

$

—

$

3,007

2015

In millions

Q1

Q2

Q3

Q4

YTD

Parts

$

573

$

598

$

604

$

648

$

2,423

Service

284

307

301

330

1,222

Power generation

298

272

323

397

1,290

Engines

321

318

323

332

1,294

Total sales

$

1,476

$

1,495

$

1,551

$

1,707

$

6,229

Component Segment Sales by Business

2016

In millions

Q1

Q2

Q3

Q4

YTD

Emission solutions

$

607

$

624

$

—

$

—

$

1,231

Turbo technologies

265

276

—

—

541

Filtration

252

262

—

—

514

Fuel systems

113

117

—

—

230

Total sales

$

1,237

$

1,279

$

—

$

—

$

2,516

2015

In millions

Q1

Q2

Q3

Q4

YTD

Emission solutions

$

613

$

679

$

607

$

600

$

2,499

Turbo technologies

301

307

266

267

1,141

Filtration

255

266

240

249

1,010

Fuel systems

130

145

127

120

522

Total sales

$

1,299

$

1,397

$

1,240

$

1,236

$

5,172

Power Systems Segment Sales by Product Line and Unit Shipments by
Engine Classification

In the second quarter of 2016, in conjunction with the reorganization of
our segments, our Power Systems segment reorganized its reporting
structure as follows:

Power generation - We design, manufacture, sell and support
generators ranging from 2 kilowatts to 3.5 megawatts, as well as
paralleling systems and transfer switches, for applications such as
residential, commercial, industrial, data centers, health care,
telecommunications and waste water treatment plants. We also provide
turnkey solutions for distributed generation and energy management
applications using natural gas or biogas as a fuel. We also serve
global rental accounts for diesel and gas generator sets.

Industrial - We design, manufacture, sell and support diesel
and natural gas high-horsepower engines up to 5,500 horsepower for a
wide variety of equipment in the mining, rail, defense, oil and gas,
and commercial marine applications throughout the world. Across these
markets, we have major customers in North America, Europe, Middle
East, Africa, China, Korea, Japan, Latin America, India, Russia,
Southeast Asia, South Pacific and Mexico.

Generator technologies - We design, manufacture, sell and
support A/C generator/alternator products for internal consumption and
for external generator set assemblers. Our products are sold under the
Stamford, AVK and Markon brands and range in output from 3
kilovolt-amperes (kVA) to 12,000 kVA.

Sales for our Power Systems segment by product line (including 2016,
2015 and 2014 revised balances) were as follows: